The excellent Gretchen Morgenson makes a good point in her New York Times column today. As she puts it, “here in Bailout Nation, you’ll be surprised to learn, some of us are more equal than others”.
Her argument is that Congress is operating to double standards. Last week, it refused to support $14bn of lending to the auto industry, on the basis that “we cannot ask the American taxpayer to subsidise failure”. Yet in October, it allocated $700bn to rescue the banks, where “taxpayers are financing not only failure, but also outright recklessness and greed”.
Equally, she notes, that before even considering the automakers rescue, Congress required them to submit detailed business plans, sell their private jets, and negotiate pay-cuts for the workers. Yet the banks have not been required to produce business plans, stop paying excessive bonuses, or sell their jets.
The blog takes no position on the merits of the proposed automakers bailout itself. But it does remain very concerned that the banks’ $700bn bailout is still being run by a 35 year old ex-Goldman Sachs banker with just 5 permanent staffers.